On its face, AB 2226 seems logical and innocuous enough. It simply requires public agencies, like the California Coastal Commission or State Lands Commission, to presume that a person who holds title to land is the person who actually owns and controls the land. More precisely, the law would change the standard of review for these agencies from the current “substantial evidence” test (which is not easy to meet, but does allow agencies to exercise some discretion) to a much higher “clear and convincing proof” test that is often used in courts. The main difference is that courts have the tools necessary to achieve “clear and convincing proof” (such as subpoena power, deposition, sworn testimony and cross examination), while public agencies do not. In essence, the increased standard of “clear and convincing proof” will make it nearly impossible for public agencies to pierce the corporate veil and determine who actually holds title to land.

So, why does such a seemingly mundane change matter? It matters because, if this legislation had passed, it could have dramatically altered development in California, particularly in the coastal zone and public tidelands.

The most illustrative and infamous example surrounding AB 2226 was the project proposed by U2’s guitarist, The Edge (aka David Evans), in the Santa Monica Mountains. More precisely, the California Coastal Commission suspected that it was The Edge who proposed building five (albeit innovative and energy efficient) 10,000+ square foot mega-mansions on five parcels of ecologically important lands in Malibu. The five parcels, home to mountain lions, other wildlife and native chaparral, were actually owned by five separate Limited Liability Limited Partnerships (LLLPs), all with close ties to the famous guitarist. This is important in light of takings law, which provides a development right on separately and independently owned land. If all five parcels were truly owned and controlled by separate parties, the Commission would be obligated to allow all five homes to be built; if, however, The Edge actually owned or controlled the parcels as part of a larger development project, the agency could limit such development to one, two, three or four homes in order to protect wildlife corridors and critical habitat. Without the tools courts have, it was impossible for the Commission to definitively identify ownership; however the agency did deny the project under the ‘unity of ownership’ theory (arguing that it was, in fact, The Edge who controlled the five parcels). The Commission was subsequently sued by the various LLCs, and the case is currently in litigation. If the full project had been brought under the standards proposed in AB 2226, the Commission may have had little choice but to accept the title and approve the five projects.

Though The Edge is certainly the poster-child for this type of land ownership manipulation, his case is just the tip of the iceberg. The same attorneys representing The Edge are involved in other lawsuits with similar fact patterns against the Coastal Commission. One could argue that these attorneys are trying to create laws (through the Legislature or courts) that will allow projects to be broken up into smaller-and-smaller pieces to allow for maximum development, despite community and environmental impacts. Those watching this issue closely see corollaries with the ‘wise use movement’ of the 1980’s and 1990’s that has done so much damage to public lands since that time.

AB 2226 almost snuck under the radar, as the language didn’t include any of the environmental key words or go through traditional environmental committees that we usually track when following hundreds of bills all moving through the legislature. Luckily, a source within the Capitol alerted us to the bill. Without this help from inside the Capitol, AB 2226 may have become law with virtually no opposition.

Because of the incredibly dangerous precedent this law would have set, groups like PCL, NRDC, Sierra Club California, Environment California, California Coastal Protection Network and Surfrider Foundation teamed up with agencies like the California Coastal Commission and banded together to oppose AB 2226. A heartfelt thank you goes to those in the Capitol who first let us know about this stealth bill and also to the members of the Senate Judiciary Committee – Chairwoman Noreen Evans, Senator Mark Leno and Senator Ellen Corbett – who held strong in defeating this bill.